Stocks flat amid fears inflation may continue to haunt economy

Stocks on Friday came to a flat end in erratic session on an unusual mix of profit-taking, trade-aversion, and macroeconomic concerns that the inflationary pressures were likely to persist in the short-haul, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index slipped 0.23 percent or 72.93 points to close at 32,111.10 points, while its KSE-30 shares index shed 0.29 percent or 43.65 points to end at 15,103.00 points.

Of 351 active scrips, 138 advanced, 195 retreated, and 18 did not move. Investor participation ebbed as a total of 153.277 million shares changed hands in the session, compared with 136.566 million shares yesterday, posting a decline of 12 percent day-on-day basis.

Madiha Javed, head of research at Ismail Iqbal Securities, said, “The benchmark index remained volatile throughout the session today with profit-taking witnessed in the latter part of the session”.

“Cement-makers, commercial banks, and technology and communication companies cumulatively shaved 79.45 points off the index,” Javed added.

Salman Ahmad, head of institutional sales at Aba Ali Habib Securities, said “Stocks were mixed-to-dull because of technical correction and profit-making by the players ahead of rollover week”.

“During the upcoming week the investors will keep a close eye on Prime Minister Imran Khan’s visit to the USA, while in case of some encouraging development there the market will react accordingly,” Salman added.

Today, the market mostly remained dull with the index moving at a snail’s pace, touching a low of 32,114 points and a high of 32,332 points. The investors remained on the back foot because the upcoming rollover week would see financial institutions and other entities selling their holdings to adjust their open positions.

A leading trader said there had been a decline in the demand from the institutions and leading high-net-worth individuals as they believed a cut in benchmark interest would go against earlier expectations in next two months.

Dr Raza Baqir, Governor State Bank of Pakistan, in a meeting with the International Monetary Fund (IMF) delegation, said the measures taken by the government had started paying, evident from contracting imports and expanding exports. However, Baqir added that inflationary pressure were still hitting the economy and may cool down in the second half of this fiscal year. Analysts said this statement almost muted the trading pattern at the capital market.

On the other hand encouraging portfolio investment numbers, rising to $107 million in the first two months of current fiscal year to hit a five-year high, failed to entice investors, who held that the investment from foreign fund houses was not in line with the size of the market and need to be increased.

The highest gainers were Bhanero Textile, up Rs30.45 close at Rs850.56/share, and Gatron Industries up Rs14.35 to finish at Rs458/share.

Companies that booked highest losses were Colgate Palmolive, down Rs55 to close at Rs2144.00/share, and Sitara Chemical, down Rs11.55 to close at Rs228.45/share.

Maple Leaf recorded the highest volumes with a turnover of 18.012 million shares, losing Rs0.98 to end at Rs15.74/share, while Fauji Foods Limited posted the lowest turnover at 4.929 million shares, but gained Rs0.21 to end at Rs11.08/share.